German chipmaker Infineon Technologies has sold
its fiber-optics business unit and is closing down three plants, the
company said Tuesday.

At the company shareholders meeting, CEO Wolfgang
Ziebart confirmed the sale of its Berlin fiber-optics assets to equipment
maker Finisar . The companies agreed to terms after earlier
negotiations broke down.

Under the new deal, Finisar will issue Infineon 34 million shares valued at nearly $50 million.

The acquisition involves Infineon's inventory, fixed assets and
intellectual property associated with the design and manufacture of
fiber-optic transceivers, including a broad range of 10 gigabit
transceiver designs for several form factors (XPAK, X2, XENPAK and XFP).

Under separate supply agreement, Infineon will provide
Finisar with contract manufacturing services for up to one year after
the transition.

"This acquisition considerably broadens our customer and product
portfolio, particularly our 10Gig product platforms," Jerry Rawls,
Finisar president and CEO, said in a statement. "We stand ready to fully
support Infineon's current customer base and look forward to making this
an easy transition for them."

But Ziebart said Infineon will shut down facilities in Germany and
the United States and layoff approximately 1,200 employees as a result
of the transaction. In a statement, Infineon said it would retain other related businesses, including components for FTTH applications, parallel optical components (PAROLI) and plastic optical fiber (POF) components used in
automotive applications.

"The transaction supports the ongoing consolidation of the fiber-optic market, and is the first major step towards the restructuring of our fiber-optic group in order to return to profitability," Ziebart said
in a statement. "The POF operations which we retain, complements our automotive strategy and will be now integrated into our Automotive and Industrial Multi Market Business Group."

Infineon spokesman Christoph Liedtke said the layoffs impact about
50 people at Infineon's R&D plant in Longmont, Colo., 350
staffers in Berlin and Munich, and 800 employees at the company's
Czech Republic facility.

Because the two side restructured their original agreement,
Liedtke said neither company needs shareholder or regulatory approval.
The transaction is scheduled to finalize on Jan. 31. After it does,
Infineon will have approximately 13 percent equity stake in Finisar.